Companies that trade at market prices below their actual values, such as Liberty Tax and Chicken Soup for the Soul Entertainment, are perceived to be undervalued. Investors can determine how much a company is worth based on how much money they are expected to make in the future, or compared to the value of their peers. The list I’ve put together below are of stocks that compare favourably on all criteria, which potentially makes them good investments if you believe the price should eventually reflect the stock’s actual value.
Liberty Tax, Inc. (NASDAQ:TAX)
Liberty Tax, Inc., together with its subsidiaries, provides tax preparation services and solutions in the United States and Canada. Started in 1996, and now run by Nicole Ossenfort, the company provides employment to 1,498 people and with the stock’s market cap sitting at USD $145.14M, it comes under the small-cap group.
TAX’s stock is currently floating at around -62% less than its actual worth of $27.02, at the market price of US$10.35, according to my discounted cash flow model. The divergence signals an opportunity to buy TAX shares at a low price. In addition to this, TAX’s PE ratio is currently around 11.33x relative to its Consumer Services peer level of, 23.03x suggesting that relative to its competitors, we can invest in TAX at a lower price. TAX is also strong in terms of its financial health, as near-term assets sufficiently cover liabilities in the near future as well as in the long run. It’s debt-to-equity ratio of 41.22% has been diminishing over time, indicating its capacity to pay down its debt. Continue research on Liberty Tax here.
Chicken Soup for the Soul Entertainment, Inc. (NASDAQ:CSSE)
Chicken Soup for the Soul Entertainment, Inc., a media company, produces, distributes, and licenses video content in the United States and internationally. Formed in 2014, and currently lead by William Rouhana, the company provides employment to 32 people and with the market cap of USD $89.28M, it falls under the small-cap group.
CSSE’s shares are currently hovering at around -69% beneath its actual worth of $24.44, at a price of US$7.69, based on its expected future cash flows. This mismatch signals an opportunity to buy CSSE shares at a discount. In terms of relative valuation, CSSE’s PE ratio is currently around 3.4x while its Media peer level trades at, 15.34x meaning that relative to its competitors, we can invest in CSSE at a lower price. CSSE is also a financially healthy company, as near-term assets sufficiently cover liabilities in the near future as well as in the long run.
Interested in Chicken Soup for the Soul Entertainment? Find out more here.
Palatin Technologies, Inc. (AMEX:PTN)
Palatin Technologies, Inc., a biopharmaceutical company, develops targeted, receptor-specific peptide therapeutics for the treatment of various diseases in the United States. Founded in 1986, and currently headed by CEO Carl Spana, the company size now stands at 22 people and with the market cap of USD $233.89M, it falls under the small-cap group.
PTN’s stock is now trading at -47% under its real value of $2.23, at a price tag of US$1.19, according to my discounted cash flow model. This mismatch indicates a chance to invest in PTN at a discounted price. Also, PTN’s PE ratio is trading at 9.94x while its Biotechs peer level trades at, 24.96x meaning that relative to its comparable company group, we can purchase PTN’s shares for cheaper. PTN also has a healthy balance sheet, as short-term assets amply cover upcoming and long-term liabilities.
Interested in Palatin Technologies? Find out more here.
For more financially sound, undervalued companies to add to your portfolio, explore this interactive list of undervalued stocks.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.